Tech Angels Cross The $1 Billion Mark In 2013

Buoyed by a stronger economy, angel investors companies worldwide poured a record amount of cash into early-stage technology and life-sciences companies, according to data from CrunchBase.

Angel investments have been climbing steadily since 2008, CrunchBase data shows, but 2013 represents a new high, with investors crossing the billion-dollar threshold, committing $1.1 billion to entrepreneurs launching new tech companies, up from $929 million in 2012.

In the first half of 2013, angel investors invested $461 million in a total of 379 deals, according to the Halo Report, a survey of angel investments published by Silicon Valley Bank, Angel Resource Institute and CB Insights.

Angels committed more capital in each quarter of 2013 than in the previous year, according to CrunchBase data. And U.S.-based startups raised the bulk of that cash, attracting $687.9 million in 2013, up from $646.9 million in 2012, the CrunchBase data shows.

“I think it’s about the economy and the economy continued to improve,” said Marianne Hudson, Executive Director of the Angel Capital Association, a trade group for early-stage investors. “The economy felt better from all stages in 2013 than in 2012 and that also meant that angels had more money to spend and invest.“

Meanwhile, Michael Cain, a member-manager of the Wilmington Investor Network, an angel investment group based in Wilmington, N.C., said collaboration and the continuing professionalization of the industry were also factors in the growth, and growing clout, of angels.

“You get more minds around the table, [and] you get better due diligence because you have more people who know the space.”

Angels are also seeing their investments pay out, which encourages more activity, investors said.

“We strive to do two rounds of angel [financing] and get out,” Mr. Cain said. “[We’re] looking at pre-monies of under $3 million and exits in the $20 million to $40 million range.”

Acquirers snatched up 48 companies that had raised just one round of capital in 2013, including home improvement site, BrightNest, which was bought by Angie’s List only two years after raising its seed funding.

Among the biggest winners were the backers of Medafor, a Minneapolis-based life sciences company which raised $15,000 in angel funding in 2012 and was acquired by the medical technology company C.R. Bard for $200 million.

“There were a lot of companies that may not be that recognizable across the country that did deliver between 3x and 15x returns,” Hudson said.